Due to budget cuts, Arizona State Parks is closing 13 of its 22 state parks. This last week, I have been making the rounds of the state government, from the state legislature to the head of Arizona State Parks, with a proposal to keep the 7 largest of these closed parks open, and pay the state money for the privilege. Unfortunately, we have had only mixed success with a proposal that seems to me to be a win-win for everyone. Our local newspaper editorialized against my proposal, without even knowing the details (my response here). So in this post, I am going to give the details of our proposal, and solicit your feedback, especially those of you in Arizona. All I ask is that you read the whole thing, and not just leap into the comments section having just read and reacted to (positive or negative) this first paragraph about private operation of public parks.

Background

Our company, Recreation Resource Management (RRM), is over 20 year old, and we operate over a hundred public parks under concession agreement for the US Forest Service, the National Park Service, the Tennessee Valley Authority, California State Parks, and many others. Traditionally, park concessions used to be limited to private companies running the gift shop or the bike rental inside a park. And we do some of that (for example we run the store and marina at Slide Rock and Patagonia Lake State parks). But our preferred niche has always been to run entire parks on a turnkey basis. We run a huge variety of facilities that largely parallel anything we might find in the Arizona State Parks system -- including campgrounds, day use and picnic areas, boat ramps, hiking trails, wilderness areas and historic buildings. The largest parks we run are twice as busy as Slide Rock or Lake Havasu and four times as busy as any of the parks we are proposing to manage. We currently run parks today literally right beside some of these Arizona State parks. All of this is to say that the parks in Arizona are absolutely normal and typical resources that we manage.

A concession contract works much like a commercial lease. We sign a contract allowing us to run the park for profit, and then pay the state a rent in the form of a percentage of fee revenues. The typical operating agreement includes over 100 pages of standards we must conform to, from fee collection to uniforms to customer service to bathroom cleaning frequency to operating hours.

Our Proposal

At all of my meetings this week I made three offers, each of which we were willing to commit to immediately (we could actually be up and running with about 21 days notice):

RRM offered to keep some or all of six parks open out of thirteen on the current closure list. These parks are Alamo Lake, Roper Lake, Tonto Natural Bridge, Lost Dutchman, Picacho Peak and Red Rocks (park but not the environmental center). Not only could these stay open, but we could pay rent as a percentage of fee revenues to the state, money that could be used to keep other operations open. While these parks represent about half of the closure list by number, by visitation they represent well over 90% of the closure list. Combined these parks had a net operating loss of $659,000 to ASP, which we propose to turn into a net gain for the parks organization.

RRM offered to operate five parks that are currently slated to stay open but where we could pay rents that are higher than the net revenue figure ASP showed for FY2009. These parks are Patagonia Lake, Buckskin Mountain, Dead Horse Ranch, Fool Hollow and Cattail Cove. Combined, this group of parks lost money for ASP in 2009 which we propose to turn into a solid net gain.

While we would need to do more study, RRM suggested it might take on some of the smaller, money-losing parks beyond those mentioned above if they were packaged in a contract with some of the other parks listed above

To avoid problems with the procurement process, we offered to take as short as a 1-year contract to give ASP time to prepare a longer-term bid process. We also agreed to maintain all current park fees for the next year without change (in contrast to ASP current plans to raise fees), and agreed that no fee could be changed without ASP approval. The only help we asked for was

We perform rules enforcement, but we need law enforcement backup form time to time

We perform routine maintenance and keep the park safe and attractive, but many of these parks have substantial deferred maintenance problems that we cannot take on with only a 1-year contract (but would be willing to invest capital to repair under a longer term arrangement)

And if the ability to keep almost half the parks slated for closure open was not enough of a value proposition, we proposed one additional benefit. Any parks that are put under private concession management immediately cease to be a political football. For years, parks organizations have closed and opened parks in a game of chicken with legislators, with the public as the victim. Parks under private concession management no longer are subject to such pressures, as they are off the budget. Back in the 1990's, when the new Republican Congress squared off with President Clinton over the budget, the government was shut down for a while, including all federal recreation facilities -- EXCEPT those under private concession management. We got calls from the media saying, why are you open? To which we replied -- hey, you have now discovered one benefit of private concession management -- the parks we manage are no longer political pawns.

Reactions

So far we have had really good and positive reactions from Arizona legislators (I have not been able to see any of the Governor's staff).

The reaction from Arizona State Parks has been more muted. While they are publicly open to all proposals, in reality this is the absolute last thing most of their organization wants to do (you should see the body language in some of our meetings, it is a lot like trying to sell beer at a Baptist picnic). They have not said so explicitly, but from long history with this and other parks organizations I can guess at some of the issues they have:

Distrust of and distaste for private management runs deep in the DNA of the organization. Many join parks with a sense of mission, seeing unique value to public ownership of parks and lands. I attempt to explain that this value still exists, that what they are turning over is operations, not management and control, but I don't get very far. I try hard to give the new management of Arizona State Parks a clean slate, but I can't help but be affected by something I saw their previous director say. Back in about 2004 we hosted a breakfast at a convention of state parks directors up in Michigan, I believe. Someone must have forgotten to throw us out of the room, because we witnessed the head of Arizona State Parks stand up in front of his peers and demand that they all hold the line against private management as one of their highest priorities. It was made clear that state organizations that stepped out of line would incur the wrath of other states. This summer we participated in a series of meetings in California called by Ruth Coleman, who is the head of the parks organization there and someone I admire. She was trying to break the organization out of its old culture, but it was very clear in roundtable discussions that the rank and file would rather see the parks closed to the public than kept open using private concession management.

I mentioned earlier that private management brings a benefit to the public of keeping the parks from being a political football. But the parks organization feels like it needs that football. Without the threat of park closures, it feels like its budget will be gutted like a fish. And, now that its budget has been gutted, it still holds out hope its money will be restored and needs the park closures to keep up the pressure. As long as there is even the slightest hope of budget restoration, a hope which I am pretty sure will "spring eternal," my proposal, no matter how much it makes sense for the people of Arizona, will never be adopted.

Again, these are just guesses. Renee Bahl of Arizona State Parks has told me they are open to all new ideas, and I will take her at her word.

Libertarian Concerns

Those of you who know me to be a libertarian might wonder how I function in this environment. The answer is, "with difficulty." I have a strong philosophic passion to bring quality private management to public services, and this opportunity is a good one. And I am not adverse to making money while doing so. But I am adverse to rent-seeking, and there is admittedly a thin line between trying to make positive change and rent-seeking in this case.

I generally avoid this by insisting on short initial contracts (in this case 1 year) to prove out the concept and to allow time for the public agency to figure out how to put this beast through a procurement process that probably was not well designed for this type of thing. This is what I did when the US Forest Service approached us with an idea to bring private management to the snow play area at Wing Mountain near Flagstaff. We took it on a one-year contract (which grew to 2 years) and then the contract went out for public bid - which we won - for 10 years. We are very good at what we do and are not at all afraid to compete. The only time I will not compete is when I perceive someone has a political connection that gives them an inside track. After two or three losses in Florida counties to a company with no experience but a brother-in-law on the County commission, I realized it was just a waste of time to bid on these situations.

Conclusion

Please give your reactions and concerns in the comment section. For those who disagree with private management of public resources, I will be honest and say you are unlikely to change my mind, as I have dedicated all my time and my life savings to the proposition. But you may help me better understand and tailor our service to address public concerns. I will try to keep the FAQ below updated based on what I am seeing in the comments. If you are in Arizona and know someone you think I should be talking to, drop me an email at the link above.

FAQ

Does your company take ownership of the park? No. The parks and all the facilities remain the property of Arizona State Parks. We merely sign an operating lease, with strict rules, wherein we operate the park, keep the fees paid by the public, and pay the state a "rent" based on a percentage of the fee collections. Even when we invest in facilities, like this store building and cabins, they become the property of the public at the end of the contract.

How can the state afford to pay you if they have no budget? We are not paid by the state, and receive no subsidy. 100% of our revenue is from fees paid by visitors to the park we operate. If we don't run a good operation that is attractive to visitors, we don' t make any money.

Doesn't the state lose out if you keep all the fees? No. Mainly because in all the parks we have proposed to take over, the state has net operating losses of up to $200,000 or more a year. By taking over the park, their losses go away AND they receive extra money in the form of rents we pay. We are able to do so because we have developed efficient processes for managing campgrounds and have a flexible and dedicated work force.

Are you going to build condos and a McDonald's? No. The fact that this is such a common question is amazing to me, as we operate over 100 parks in this manner across the country and you would not be able to tell the difference between the facilities we manage and any other public park. Under the terms of our operating contract, we cannot change fees, facilities, operating hours, or even cut down a tree without written approval form the parks organization.

Are you going to just jack up fees? No. We have committed in our offers to keep fees flat for the next year. We cannot raise fees without state approval, and we work hard to keep public recreation affordable. Last year was a very good year for us because, in a recession, our low-cost recreation options gave many families on a budget a chance to have a quality recreation experience.

Why just a one year contract? We would actually prefer a longer contract, as this allows us to actually make approved capital improvements to parks (for example, we have installed many cabins in public parks we operate). However, we have offered to take these under an initial contract that is just long enough to allow longer-term contracts to be fairly offered on a competitive bid basis.

Maybe no one trusts you because you are small and unproven? Well, perhaps. But last year our total fee revenue was nearly $11 million, making us slightly larger than the Arizona State Parks system. We have a proven record with decades of positive performance reviews from government agencies around the country. For example, for those of you form Arizona, if you have stayed at a US Forest Service developed campground near Flagstaff, Sedona, Payson, or Tucson, or sledded at Wing Mountain, you probably have stayed in a facility we operated. We already operate two concessions in Arizona State Parks, and have a great record working with the organization.

It's not so much the private management I disagree with (which is preferable to public management), as the existence of such public resources at all. I don't envy you for the contradictions you have to juggle to remain in that line of work.

http://thereisnoevidence.com/ Mick Langan

Great post as usual, Warren. This should be a no-brainer. As a state park user myself, and friend of a small (saddle barn) concesssionaire, it makes all the sense in the world.

Keep Arizona parks open!

David Thornburg

Bet offer the State ever received. You may have a problem with the prepaid yearly passes,so just accept them since turning those folks away serves no purpose or loss of revenue.

http://GeoApps.com Angus Scott-Fleming

I suspect there might be a third reason you're getting push-back from ASP: empire-protection. In state government, part of the prestige of the positions of those in power is the number of employees they manage and the size of their budgets. If you take over operation of any parks, they lose significant numbers of employees *_and_* their monopoly on parks management. If you do well at it, they will find it difficult to re-grow their empire once times get better.

Brent

FA Hayek wrote in Road Serfdom about the Left's disingenuous claims that it just wants to move past economic quarrels and focus on people and hugging trees, etc. Liberals and progressives think of nothing BUT economics (most notably, other peoples' money they feel they have intrinsic claim to or power over).

Conservatives and libertarians MUST start doing a better job of explaining and defending and promoting (tirelessly, I might add) the free market system and the inextricable links between religious, political and economics freedom.

I've said it before. You guys need to incorporate as a non-profit, like the smart businesses do out here in California. Doesn't matter that the top execs get paid 700k in salary, it's a non-profit. Adjust your sails man.

Pat Moffitt

When is the public going to wake up to the fact that park closures are always the first chosen in budget cuts- it is nothing more than a cheap political trick- make the public feel the hurt and hopefully we can suck more taxes out of them rather than actually cutting the fat out of the beauracracy

Some advise in downsizing burearacracy-- axe those that try to justify their jobs by creating new regulatory hurdles, programs, paperwork etc which cost us money- keep the ones if we must -that do nothing- they only cost us their salary and benefits

Stan

I don't see why it shouldn't work. Although if you're up against people who think like that editorial, well, there's no sense in dealing with the irrational. That editorial was laughable, as if a statement of opinion was a sound argument. You think they would try to back up their claim.

ben

The thing that struck me most about this is the willingness to close parks to save a mere $659,000. I assume Arizona State is in a hole worth $billions - in which case I simply can't believe that this tactic actually works. Isn't it perfectly obvious to every citizen what is going on?

Government must be the most evil organisation conceived. An institution that is founded from the ground up on coercion and blatant dishonesty and, in Arizona as everywhere, is wildly out of control. Shame on the collectivists.

IgotBupkis

Win win except for the Big Government no-business-is-good-business assclowns, so of course it's an exceptionally uphill battle.

RustySeaGull

The problem is Opium, otherwise known as O.P.M. or Other Peoples Money. Very addictive. Treatment programs like yours require the "patients" to admit the basic cause and desire and are traumatic and life changing.

JoshK

If you see a lot of potential business in AZ, then you should make sure that you, your wife, kids, top employees, etc, send contributions to key legislators. I think most research shows that "investing" in the legislative process has a return of $200 per $1 invested.

As mentioned above, incorporating as a non-profit may make sense as well. On your letter head make sure your mission statement is visible as well: "Creating sustainable, organic, park-management solutions for the benefit of historically under-served communities.

Don't let your intellectual beliefs stop you from making money.

Gary

I think that the reason that you have been unsucessful in dealing with public instituitions is that because you can not empathize with their real needs and real goals. I am a libertrian (my spelling is awful) also and I work in corporate jobs which I found to be baffling, because I was unwilling to find any sympathy for owners of profit making business' that would consider anything other than profit as a source of motivation. I started speculating in equities, and I promptly had a very rude awakening in the depths of human behaviour. People are motivated by very different things and will seperate themselves into various professions based on their underlying bias'. You and I are similiar in that respect, but we are just one small aspect of the population. Your frustration at bringing in some contracts that you know you could and should do, is not the fault of the bureacrats that you are facing, but your own bias'. I don't mean to chastize or critisize but to try to point the direction for possible solutions. If you would like to challenge what I am saying or if you would like more dialog feel free to contact me at my email address. All of the answers to our problems lie within us.

Gary

bryan

Ever catch the show "Parks and Rec"?
I suggest you contact Ron Swanson. You do have a kindred spirit in the parks department... just too bad he's a fictional character.

Saloner

It is a pity, Mr.Meyer, that you're compelled to initiate this discussion at all.

mahtso

â€œOur local newspaper editorialized against my proposal, without even knowing the details (my response here). â€œ I do not see that in the editorial (Iâ€™d ask you to point out what I missed, but I know you do not respond to comments.) What the editorial says is:

â€œThere may well be a role for private concessions in the future of Arizona State Parks. The parks board should look into the opportunities, just as it should consider various possible partnerships. But let's not be deluded that privatization is some miracle cure.â€

I donâ€™t see how that can reasonably be considered an editorial against your proposal.

Iâ€™ll admit that when I read the editorial the first time the blogger posted it, I thought it was well reasoned (although that is based on the assumption that it is factually accurate.) So, after reading this post, I thought maybe I missed something and re-read the editorial. Again, to me, it appears well reasoned, but I would be glad to learn why I am wrong.

Stan wrote: â€œThat editorial was laughable, as if a statement of opinion was a sound argument. You think they would try to back up their claim.â€ Stan, please tell me what was laughable and why.

Your experience exactly mirrors a hot local controversy over libraries. Our county library system is heavily dependent on sales taxes, and is running a significant deficit in the current economy. The current county executive proposed to examine outsourcing operation to a private company with experience in library management, and a holy war broke out.

The current public library management has already significantly reduced hours of operation (some branches only open two afternoons a week, and Saturday hours have vanished), some staff cuts have been made, and the deficit grows.

The bidder for the management contract has agreed to hire all existing staff at their current salaries, provide medical insurance and a 401(k), increase the budget for new material, and so forth. The staff would, however, no longer have access to California's platinum plated public pension system.

A significant amount of the opposition simply displays a visceral revulsion to turning a public library over to private management, and has been totally unwilling to consider anything but more tax money, and, failing that, more closures. Apparently private management would forever taint the contents of the sacred library, and the evil profit motive would destroy the entire system.

There's a whole world-view there that is beyond my understanding. How have we raised so many who are so totally in love with government, and so totally repelled by capitalism.

By the way, we've visited Burney Falls several times. Outstanding operation and much cleaner and well maintained than most of the 'publicly' operated state parks out here.

JoshK

One other thing is that there may be law firms there who have assisted with general lobbying efforts. They might be able to help you quite a bit, especially in this environment where there is so much dissatisfaction with incumbents, the state legislators may be eager for your help. Yeah, it's BS, "hate the game, not the playa'". But it should be helpful.

JoshK

Last idea is that you probably could use sales help. Your best candidate is someone connected to the local gvt.

http://harqueb.us Mike S

mahtso - the editorial opens with the title "Privatization will not cure parks' money woes," goes on to explain how publicizaition of the parks *causes* all the money woes, and then fails to acknowledge how privatizing the operation of the parks takes those completely off the books of the state, which *does* cure those parks' money woes.

Back the the blog post - it is well written and addresses my concerns. If you look at the comments to the Arizona Republic article, you'll see the concerns of the anti-privatization crowd, which you could make sure are addressed in the FAQ.

Also, there's two places in the FAQ where your spellchecker inserted the word "form" in place of "from," in the fourth and last paragraphs.

me

Sounds great - I hope you'll be successful in this bid. You might find consensus easier if you modify the offer for the lease to be cancellable every year for the first 5 (with investment coming from a limited state budget instead of your pockets), if "but how would we undo this situation if things improve for the state" is the concern of your counterparties.

Mark

@Ben

It probably cost them more in research, setup and mothballing fees then the 600K they are actually saving.

It is just a way to stick it to the people, instead of closing down pet projects they always threaten Fire, Police, and Parks so people get all antsy, and don't object when taxes are raised.

Try to get rid of a worthless program and "You don't hate old people do you? We need to do it for the Children" And what that means is you give teachers and caregivers big sopping raises in the middle of a recession - which does not benefit the Children or Elderly one iota.

CT_Yankee

The barrier is obvious and virtually insurmountable. The politicians are deliberately creating a problem, so any solution you propose defeats their objective. Offer to create bigger and more visable problems for them to help cover up for the loss of park closures.

perlhaqr

Other than the fact that I know it's not actually about keeping the parks open, I can't imagine why the state wouldn't jump all over your proposal. They immediately stop losing money, they start making money off the facilities, and the facilities all stay open. If there was even a shred of truth to their claim to "serve the people of Arizona", they'd go for it. In reality, sadly, as stated by other commenters, it's all about empire building and maintaining control, and frankly, fundamental opposition to the market.

As for the notion that you might be engaged in "rent-seeking", well, I know the term means something else, but in the context of this gig, where you end up paying rent to the state, it's pretty laughable.

ADiff

As an Arizona resident, and occasional user of its State Parks, I'm all in favor of your proposal. In fact I'd support it not merely as an alternative to closing the parks, but to state agency operation in general. Since the State retains full ownership, and makes policy, why should it matter what organization actually operates them (except to ulterior interests such as empire-building and cronyism)? Let's use the example of state office buildings: why would contracting a private firm to maintain and clean them be any kind of threat to the public interest? Quite the opposite in fact, as private firms are not only far more responsive and agile in response to changing demands and market conditions, they're possessed of far fewer hidden agendas and operating parameters. Just out of curiosity, did you pitch Ken Cheuvront? I imagine he would be supportive, unless I'm rather badly mistaken. How about Krysten Sinema? If you could get a lefty like her to support the proposal, that might help undercut the bureaucratic institutional support.... Just an idea....

http://www.humanadvancement.net/blog Kyle Bennett

perlhaqr,

I'll bet the rent he's paying is far, far below market value for the acreage, location, natural features, and capital improvements already in place. He is getting subsidized, stemming from the fact that the land was initially acquired by its "owner", and possession retained, without the inconvenience of capital outlay, carrying costs/amortization, taxes, and other expenses the rest of us are subject to.

Dr. T

The state of Arizona and many of its localities derive a significant percentage of their monies from tourism. Closing public parks will decrease tourism and thereby decrease government revenues. Apparently, Arizona's government administrators and politicians would rather lose money than allow private contractors to run the parks. This proves that they care about power and appeasing the government's union employees and do not care about the health of the state or the happiness of its citizens and tourists. Most of the media side with government, which is why the asinine Arizona Republic opposes privatization.

Tim

Here's a couple of specific suggestions to improve your proposal:

- Show specific instances where you agreed to local operating rules, and what those rules were.

- Offer to work with, say the tourism board/chamber of commerce to provide advertising elements (b roll, stock photos, etc.) of facilities that you manage. Would you consider paying for advertisements on facilities you manage?

- To be honest, it sounds like a scam. How can you make money, when the state can't, considering the revenue stream and capital costs are equivalent. Without giving away your whole business model; show how you make money.

- Lay out a master plan. If you had a 10 year management contract, what specific capital improvements would you make for these facilities? Work up some renderings. Show the specifics of deferred maintenance that you would fund.

http://http//www.tinyvital.com/blog John Moore

Warren, your proposal is outstanding, and I'm not surprised our local bureaucrats are negative on it. It shows them to be incompetent - they lose money, but you'll make money AND give the state some of it.

I wish you luck. Closing the parks is outrageous. Can't they just sell the damned train to some idiots in Florida?

CT_Yankee

Tim:
- To be honest, it sounds like a scam. How can you make money, when the state canâ€™t, considering the revenue stream and capital costs are equivalent. Without giving away your whole business model; show how you make money

Government will propose a commision to consider a study of the environmental impact, where a private business would just stand up the garbage can that fell over, pick up the trash, and move on. The success of privatizing is based upon elimination of the inefficiencies of government. By turning a net loss into profit under the same conditions, with different management, Coyote is proving that better management is possible. The government does not want to admit to mismanagement, so any attempt to improve policies must be ruthlessly surpressed. Officials will close the park rather than risk generating evidence that they were not very good at thier jobs.

mahtso

"- To be honest, it sounds like a scam. How can you make money, when the state canâ€™t, considering the revenue stream and capital costs are equivalent. Without giving away your whole business model; show how you make money"

The State was making money and the legislature took it. That was one of the points made in the editorial in the Republic, which contrary to what others have written, is not opposed to the idea of privatization.

Tim

I get the basic business model -- more efficient, lower overhead because of the employment pool the business hires from, etc. But I was suggesting that should really be explicit in the proposal.

http://N/A Joe Johnson

I hope you can proceed in Arizona. Our parks in California are in the same position as those in Arizona. If you could break thru the ice here
and get just a toehold, I would hope that you could be successful here.

http://amandasveranda.blogspot.com/ Amanda Barber

My husband has sold campground memberships for years. I would like to know what you are going to do with the information you get from the people that stay at the state parks (addresses, phone numbers) and if you are going to use the info gathered as leads to contact them and try and get them to join your membership parks.
Thanks

http://www.ThinkGreenVacations.com Stephen P. Orlowski

I just saw you (Mr. Warren Meyer) on the Glenn Beck Show on Fox News. I want to congratulate you on your endeavor. As [the 1900's era progressive] former President Teddy Roosevelt would have said: "BULLY, BULLY FOR YOU!". Seeing a need, recognizing it, and doing something about it. You are a True American. I am in the Inter-Net Travel Business [I sell Inter-Net Travel Web-Sites to HomeBased Entrepreneur's] and I would like to try and help you be a success with this. If this comment gets posted, I want to also encourage other business's to take a look and try to do something that would help you create jobs. I would like to, for starters, contibute a portion of my revenue (commissions) to your cause, when a person books from my Web-Site (a vacation of 7 days or more) and contacts me telling me they wish to help your cause. I Thank You Again. You Are A True American Inspiration, and Thank You Glenn Beck and Fox News.

Yes, lets privatize parks. Also, lets privatize the rest of state govt, including and especially the legislature.

Will

Why aren't you going to build condo's and a McDonalds? Or at least some facilities that aren't, well, smoking craters of fail?

Will

And while you're at it, go fix the food service on Blue Ridge Parkway - get the current oversized corporate vendor out of there and get some good food. (counter example to how private management can suck)

garagehero

Lets say I want to monitor what is going on in the parks that you manage... would I be constrained by the ability of private corporations to block access to records. If privatization occurs...wont records become private, rather than public, and thus closed to public review. How do public watch-dog groups get around that?

garagehero

You were on glen beck? That guy is a loon. If i was serious about my business, i would stay well clear of crackpots like beck and FAUXNEWS. By any chance, did he begin to whimper while you were there?